Big-Caps Revisit Pre-Gray Monday Levels, but Small-Caps Stall

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Blue-chip stocks galloped to their highest plateau since the Gray Monday "market event," but smaller and high-tech stocks weren't invited along for the ride.

The

Dow Jones Industrial Average

gained 73.92 to 7724.74, its highest finish since the Oct. 24 close of 7715.41 that preceded Oct. 27's 554.26-point plunge.

J.P. Morgan

(JPM) - Get Report

,

American Express

(AXP) - Get Report

,

Merck

(MRK) - Get Report

and

Coca-Cola

(KO) - Get Report

led the way. The broad

S&P 500

similarly hopped 6.36 to 944.59, closing above Oct. 24's 941.64 for the third time since the crashesque thing.

So does this look like the solid, all-together-now rally Wall Streeters have been salivating for? "Not on a breadth basis it doesn't," said Dan Baker, vice president of equity trading at

Jensen Securities

in Tigard, Ore. "It's even. It's nothing all that exciting."

Market internals were mixed at best, with

New York Stock Exchange

advancers shoving past decliners by 1,526 to 1,388 on a moderate 552.6 million shares. New Big Board highs led new lows by 87 to 51. On the

Nasdaq Stock Market

, 2,381 decliners beat 2,038 advancers on 563.6 million shares as the tech-stuffed

Nasdaq Composite Index

edged up 0.78 to 1601.22. New Nasdaq lows topped new highs by 121 to 108.

Major tech indices posted slight declines, with the

Philadelphia Stock Exchange Semiconductor Index

down 1.73 to 296.41 and the

Morgan Stanley High-Tech 35

down 0.70 to 450.72. Small-caps also trailed the big shots as the

Russell 2000

slid 1.44 to 430.69.

The big-cap stock market and the fixed-income side today moved in true tandem for a change. The benchmark 30-year Treasury bond surged 13/32 to 101 8/32 in price, its yield easing to 6.04%. The bond market rally came despite unexpectedly strong October

housing starts

, which rose to 1.53 million instead of falling to 1.47 million.

"It looks to me like it's an overwhelming flight to quality," said Hugh Johnson, chief investment officer at

First Albany

. "You see it in the bond market and you see it in the stock market as well. It's not reassuring to see it, because it has as much of a bad-news message as a good-news message."

The good news in higher stock prices and lower bond yields is fairly obvious, but Johnson said the bad news is that the boost comes from overseas investors fleeing their shaky markets and flooding into the safer U.S. Long-term, the U.S. and the world at large need Southeast Asian markets to recover domestically instead of sending their investors' money to pump up the U.S. markets, Johnson said.

Also worrisome is the worsening difficulty of finding valuation bargains in the stock market, he said. "I was having dinner with one of our portfolio managers last night, and he said, 'You know, Hugh, there's no low-hanging fruit,' " Johnson said. "We've been culling through the list looking for stocks to buy, and we can't find any that fit our value criteria. It really creates a problem."

Wednesday's market action

(earnings estimates from

First Call

):

CoreStates Financial

(CFL)

gave up 15/16 to 78 1/16 after agreeing to be acquired by

First Union

(FTU)

in a $16 billion stock swap, but it definitely won today's euphemism derby. CoreStates CEO Terrence Larsen, at a press conference, refused to specify how many jobs would be cut after the merger but said the expected "disruption" would be "significantly above" the 3,000 new jobs the deal will bring to the Philadelphia area. A new term thus enters the business lexicon. Imagine: "HugeCo to Disrupt 10,000 Workers in Cost-Cut Plan." In fairness, CoreStates does expect to find jobs inside the merged behemoth for some of the disrupted. As for the other party in the CoreStates deal, First Union slipped 3/4 to 49 1/2.

Brown Brothers Harriman

downgraded First Union to near-term hold from buy and to long-term market performer from outperform.

Merrill Lynch

(MER)

ascended 1 1/16 to 67 1/4 after agreeing to buy London-listed

Mercury Asset Management

for 3.1 billion pounds, or about $5.2 billion. The deal creates the world's third-largest active asset management group, with $450 billion under management.

Smith Barney

upped Merrill to buy from accumulate.

Jackson Hewitt

(JTAX)

skyrocketed 15 7/16, or 30%, to an all-time high of 66 15/16 after

HFS

(HFS)

agreed to buy the company for $68 per share in cash, or $480 million. HFS inched up 1/4 to 68 1/16.

CUC International

(CU)

, which is in the process of merging with HFS, trickled down 1/16 to 28 1/4.

Amati Communications

(AMTX) - Get Report

surged 4 1/2, or 29.6%, to 19 3/4 after

Texas Instruments

(TXN) - Get Report

agreed to acquire the company for $20 per share in cash, or $395 million. Texas declined 5/8 to 98.

Total Renal Care

(TRL)

slumped 3 5/16 to 27 13/16 after announcing it plans to acquire rival

Renal Treatment Centers

(RXT) - Get Report

in a $1.3 billion stock swap. Renal Treatment lost 2 1/4 to 36. Merrill Lynch lowered Total Renal to near-term neutral from accumulate, maintaining a long-term buy.

RDO Equipment

(RDO)

plummeted 4 3/8, or 21.2%, to 16 1/4 after reporting third-quarter earnings of 33 cents per share. That fell 3 cents short of the two-analyst consensus estimate but beat the year-ago 22 cents.

CKS Group

(CKSG)

jumped 2 1/8, or 18.7%, to 13 9/16 after Merrill Lynch upgraded it to near-term neutral from accumulate. The firm kept a long-term buy rating on the stock.

Helen of Troy

(HELE) - Get Report

tumbled 2 9/16, or 17.7%, to 11 15/16 after saying it expects to report third-quarter earnings of 31 cents to 33 cents per share. That would miss the three-analyst estimate by 3 cents but would top the year-ago 28 cents. The company said it expects production to catch up with orders in the fourth quarter, leading to record results for the fiscal year ending February.

Long-suffering

Dow Jones

(DJ)

traded as high as 49 7/8 after announcing it plans to

disrupt

200 to 300 jobs at its

Dow Jones Markets

unit, but it slid back for a loss of 11/16 to 47 7/16. The publisher said it plans to reduce its planned $650 million investment in the former

Telerate

, plowing $170 million into it this year and less in 1998. Dow Jones will take a "large" fourth-quarter charge for severance and writedowns of goodwill, but it still expects to earn $1.20 to $1.40 per share in 1998. The 10-analyst outlook calls for $1.39. How long has long-suffering Dow Jones been suffering? From Sept. 30, 1987, through yesterday, its stock was up 3% versus an S&P 500 upswing of 192%. But gold was down 34% over the period, so Dow Jones stock is not just as good as gold, it's better.

Speaking of gold,

Newmont Mining

(NEM) - Get Report

fell 13/16 to 30 1/2 and affiliate

Newmont Gold

(NGC)

fell 1 3/8 to 31 1/8 after the companies cut their quarterly dividends to 3 cents per share from 12 cents to save cash as gold prices drop. Gold today lost $2.60 to $305.00.

Oil drillers and oil-service stocks were drubbed on what some analysts characterized as year-end profit-taking.

Friede Goldman International

(FGII)

lost 6, or 15.5%, to 32 11/16,

National-Oilwell

(NOI)

lost 4 3/8, or 12.7%, to 30,

Cliffs Drilling

(CDG)

lost 4 9/16 to 63,

Atwood Oceanics

(ATW)

lost 5 15/16 to 102 1/16,

Transocean Offshore

(RIG) - Get Report

lost 2 7/8 to 49 1/8,

Halliburton

(HAL) - Get Report

lost 1 3/8 to 53 5/8 and

Schlumberger

(SLB) - Get Report

lost 1 3/8 to 82 1/4.

Veritas DGC

(VTS)

, which late

yesterday issued a positive earnings outlook, nevertheless shed 1 5/8 to 38 7/16.

TheStreet.com

looked at the case for a driller bounce-back in a

story today, and columnist James Cramer wrote late

yesterday that he retains confidence in the group's fundamentals.

Seagate

(SEG)

sloughed off 1 1/2 to a 52-week low of 22 13/16 after late

yesterday saying it expects to report only a "marginally profitable" second quarter. Several firms made negative moves on the stock and other disk-drive makers. Elsewhere in the industry,

HMT Technology

(HMTT)

lost 1 3/8, or 9.2%, to 13 9/16,

Quantum

(QNTM)

lost 1 9/16 to 26 1/8,

Read-Rite

(RDRT)

lost 9/16 to 19 1/2 and

Western Digital

(WDC) - Get Report

lost 1/8 to 21 7/8.

Telebras

(TBR)

moved up 2 1/16 to an all-time high of 38 13/16 on news that a group of investors has submitted a takeover proposal. Terms weren't disclosed.

Tandy

(TAN) - Get Report

slipped 3/16 to 43 13/16, even though Merrill Lynch named it focus stock of the week.

Harris Financial

(HARS)

gained 5/8 to 20 after announcing a buyback of up to 1.5 million shares and naming board member Robert Kessler to the vacant position of chairman.

Zeneca Group

(

(ZEN) - Get Report

ZEN ADR) fell 1 3/8 to 89 3/8 after

NatWest Securities

cut it to reduce from hold.